Monday, March 21, 2011

The Value of a Fan

Can you measure the value of a friendship -- or better yet a fan-ship? Poetic pens will likely claim that it cannot be done, but many public relations practitioners are trying to find a way. Friendships online -- translated as Facebook “likes” and Twitter followers -- can have a real and meaningful impact on brands. So they must have an approximate, tangible value, right?

This is a question the industry is wrestling with and something we will have to answer soon. Some are already attempting answers, as two social media companies recently revealed their own calculations for “the value of a fan.”

According to research by Syncapse Corp., the total average value of a Facebook fan to a company is $136.38. This takes into account how much, on average, each fan spends with the company over the course of a year, how many sales they encourage by word of mouth and the cost that goes into soliciting and maintaining the relationship. For instance, the study suggests that that someone who has “liked” a brand may spend an average of $71.84 more each year on that brand’s products or services than will someone who has not “liked” it on Facebook. The upside to this theory is the vast amount of specific data it incorporates. However, the numbers are based on some of the best known brands and don’t account for how consumable a product is or how the value translates for smaller brands. Read the white paper here.

Virtue’s approach to “value” tells a different tale. Virtue, a social media software provider, assesses a Facebook page’s value based on the number of fans and asserts that a page with 1 million fans is worth $3.6 million, which equates to a worth of $3.60 dollars per fan. This theory is much like the traditional advertising equivalency translated into social media, and could offer a safer bet for social media values, but it doesn’t account for the engagement aspect of a social space, or the fact that brand followers can block or sort out content, which would directly affect the ultimate value. Take a deeper look at Virtue’s approach here.

So now the question is: do you buy it? The theory that we can create a value for social media interactions is disputed as a slippery and inexact slope. Both of the above calculations have issues, but they are a good place to start a conversation. And while the industry is talking about how to quantify social media, maybe this is the time to begin a conversation with your clients as well. After all, the value of any friendship depends on what you want to get out of it, so ask your teams and your clients -- what do we want our fans to say, do, remember or espouse?

The value of a fan-ship -- like a great editorial placement -- may indeed be “priceless,” but providing an accurate estimate of the worth of both will be an important part of successful PR in 2011.